9911796707
TMI Blog1992 (9) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) in respect of the sales of commodities to non-members also ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in rejecting the contention of the Revenue that the intention of the assessee under the provisions of section 80P(2)(a)(iv) at the time of purchase of eligible commodities should be, in the absence of any other evidence, inferred with reference to their ultimate sales either to members or to non-members ? (3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in granting deduction of the entire gross profit arising from the business attributable to the activities specified in section 80P(2)(a)(iv) instead of confining such relief to the net p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodities intended for agriculture. The Income-tax Officer proceeded on the basis that for attracting section 80P(2)(a)(iv), the deciding factor was the original intention at the time of purchase of such commodities and the intention could be ascertained only from their subsequent utilisation. The gross profit attributable to the transactions of sales to members was estimated at Rs. 2,42,041. The same was reduced to Rs. 80,451 by disallowing proportionate expenditure debited to the profit and loss account. In appeal by the assessee, the Commissioner of Income-tax (Appeals) upheld the claim of the assessee in respect of gross uncomputed income arising out of sales of the commodities the bulk of which were sold to the members. The Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be the following, namely :-- (a) in the case of a co-operative society engaged in :... (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or ... the whole of the amount of profits and gains of business attributable to any one or more of such activities... (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as does not exceed, (i) where such co-operative society is a consumers' co-operative society, forty thous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category and all such sales to non-members-irrespective of their proportion and quantum-would belong to the non-exempted category. The Tribunal was thus in error in holding that the original intention at the time of purchase of items was the deciding factor and not their ultimate disposal. The correct approach would be to grant exemption to the whole amount of profits and gains attributable only to actual sales of specified commodities to members, irrespective of the original intention at the time of purchase. In the context of the second question, the material expression to be noted is "profits and gains of business". The concept, though not defined under the Act, is well recognised under the Income-tax Act. Section 28 lists the incomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression "the amount of profits and gains" used in sub-section (2) of section 80P cannot be understood in a different sense. The expression must mean income as computed under section 29. In this context the provisions of section 80AB which is inserted by the Finance (No. 2) Act, 1980, with effect from April 1, 1981, may also be noticed. It is not in dispute that in case section 80AB applies, the profits and gains of business cannot mean the gross uncomputed income as held by the Tribunal. There was some debate before us as to whether section 80AB would apply to assessment for the assessment year 1977-78. As rightly held by the Andhra Pradesh High Court in the case of CIT v. Anakapalli Co-operative Marketing Society [1989] 175 ITR 58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of distribution of fertilizers under the agency agreement with the Government was deductible because of the indivisible nature of the business. (iii) Baghapurana Co-operative Marketing Society Ltd. v. CIT [1989] 178 ITR 653 (P H). In this case, the answer to the question is recorded by that High Court by just following the above decision. The nature and details of the expenditure are not discernible from the judgment and hence we presume that the factual background of the case must be identical. In our view, the ratio of none of these decisions can apply to the matter at hand. The provisions as well as the factual backdrop are quite distinct. Our attention was also invited by Shri Thakar also to a Supreme Court decision in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
